Securities Litigation, Investigations and Enforcement

Commodity Futures Trading Commission Issues First Whistleblower Award

On Monday, May 19, 2014, the Commodity Futures Trading Commission (“CFTC”) issued its first award to a whistleblower under its Dodd-Frank bounty program.

The Commission will pay $240,000 to an unidentified whistleblower who “voluntarily provided original information that caused the Commission to launch an investigation that led to an enforcement action” in which the judgment and sanctions exceeded $1 million. The heavily redacted award determination on the CFTC’s website does not reveal the name of the implicated company, the nature of the wrongdoing involved, the percentage of bounty the whistleblower received (which is required to be between 10 and 30 percent pursuant to the statute), or the factors considered in determining the percentage of the bounty.

Prior to this first grant of an award to a whistleblower under the CFTC’s Dodd-Frank bounty program, there were 25 denials of award claims. The reasons for the denials primarily fell into one or more of several categories:

the individuals provided information before the passage of Dodd-Frank;

they did not file a form TCR as required by the regulations;

they did not provide information “voluntarily” but rather in response to a Commission request; and/or

the information did not cause the Commission to open or expand an investigation or significantly contribute to a success of a Commission matter.

Time will tell whether this first award will have any effect on the number of whistleblowers who report to the CFTC or the quality of information the Commission receives.